Automatic Increase In Benefit Provision

What Does Automatic Increase In Benefit Provision Mean?

An automatic increase in benefits provision is an endorsement added to disability insurance policies that raises the monthly benefit by a predetermined percentage over a specified period. It is one of the more common riders attached to long-term disability insurance coverage, particularly for younger buyers whose income is expected to grow.

Insuranceopedia Explains Automatic Increase In Benefit Provision

An automatic increase in benefits provision specifies the exact percentage by which a policyholder’s monthly disability payment will increase over a predetermined period. Since it raises the coverage amount, adding this rider also increases the premium. The size of that premium bump depends on your age, health, and occupation class, the same factors that influence your premium on most income protection policies. The purpose is to help offset inflation, ensuring that the monthly benefit agreed upon earlier retains a similar value over time. This provision is one way to secure a stable income, helping the policyholder meet daily needs in the event of a future disability.